Bitcoin has spent the last few weeks trapped in constant declinewiping hundreds of billions of dollars off its market value and wiping out nearly a year’s worth of gains. The pullback pushed the price well below October’s record high of $126,000 and dragged down sentiment as traders look for answers.
Detailed breakdown divides crypto analyst Tracy Shuchart offers the clearest picture yet of why this decline has been so aggressive. Her analysis points to a failure driven not by a single factor, but by several interrelated forces that broke down simultaneously and created the conditions for a cascading decline. This represents a possibility Bitcoin extends its decline to just $80,000.
A breakdown of the macro story that sent Bitcoin to $126,000
According to Tracy Shuchart, Bitcoin’s rise from $40,000 to $126,000 was fueled by one dominant theory: a Federal Reserve easing cycle combined with a wave of institutional participation via spot ETFs.
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Traders priced in a favorable macro backdrop where rate cuts were all but guaranteed, liquidity would increase and institutions would steadily absorb supply. However, after the Federal Reserve changed course, the foundations of that theory crumbled.
Expectations for an interest rate cut in December dropped from 90% to 40%. Real yields on short-term Treasuries remained elevated above 5% and the strong dollar environment returned. Once the macro assumption disappeared, Bitcoin’s valuation near all-time highs became difficult to justify.
Institutions that accumulated through Spot ETFs quickly reduced exposure, generating more than $1.1 billion in outflows within the day. This was not a panic sale but a systematic rebalancing of portfolio managers who no longer believed in the macro thesis.
This change in macro expectations effectively removed the first layer of support which kept Bitcoin above six-figure levels.
The second layer of the fall came from the behavior of long-term owners. Wallets that had accumulated between $40,000 and $80,000 in bitcoin began aggressively distributing once volatility returned. They unloaded approximately 815,000 Bitcoins in thirty days, making a significant profit.
Is $80,000 Next for Bitcoin?
Shuchart’s argument is based on the idea that the current decline is still ongoing because the market has now reached a point where the natural buyers have disappeared. Institutions return to equilibrium away from risk, long-term holders await higher discounts and retailers pulled back. Until there is new demand, the price of Bitcoin it will continue to go lower.
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“Now the market is repricing based on reality: high real yields, no Fed easing, strong dollar environment,” the analyst said.
In order for a bottom to form, three conditions must be met. Leverage must be completely flushed out of the system, long term holders should stop selling and begin to accumulate again, and the price must be sufficiently attractive to real capital.
As it stands, Bitcoin is still trading above the $90,000 price level. However, recent price action has seen that slip under briefly that threshold on November 18, touching lows near $89,000 before recovering. The move shows that the downtrend is already looking for lower support in the $80,000 zone. At the time of writing, Bitcoin is trading at $91,080.
Featured image from Pixabay, chart from Tradingview.com
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